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Tech ‘revolution’ to buoy office demand -- JLL

DEMAND for office space in the Philippines will remain robust, as technological advances allow more companies to outsource work, according to real estate consultancy Jones Lang Lasalle, Inc. (JLL).

In a research report, JLL examined the implications of the “fourth industrial revolution” for the Association of Southeast Asian Nations (ASEAN) on the real estate front.

The fourth industrial revolution ushers in technology breakthroughs in artificial intelligence, automation and robotics, “extreme” connectivity and “unprecedented” access to data and knowledge, according to JLL.

“These technological advances will affect the way people work, play, live and move in Southeast Asia,” the real estate consultancy said in the report “The Fourth Industrial Revolution: The Impact on Real Estate in Southeast Asia.”

For instance, mobile Internet, automation, cloud computing and other technological advances are expected to enhance the ability of companies to implement outsourcing, flexible working and co-working.

Such workplace trends, on the one hand, will lead to fewer office and administrative jobs in high-income cities, according to the World Economic Forum (WEF).

On the other hand, the WEF expects emerging markets to post gains in employment because of economic growth, outsourcing and the rise of the middle class.

“We believe outsourcing has already contributed to strong office demand in emerging markets including India, Poland, Philippines and China while reducing net absorption in developed markets,” JLL said.

The Philippines has more than 700 companies and global in-house centers serving North America, Asia and Europe, according to data from JLL Philippines.

The information technology and business process outsourcing industry employs 1.3 million directly and 3.2 million indirectly in the Philippines.

Emerging technology could further enhance companies’ ability to outsource work to regions such as Southeast Asia in the next five years and new locations could emerge, it added.

“For developing markets such as Philippines and India, online freelancing is a growing trend,” JLL said, citing data from online workplace Upwork.

The Philippines is the world’s third largest country in terms of earnings from freelancing, with 1.3 million individuals registered with Upwork as of June 2015.

“Majority of online jobs taken by Filipinos are in administrative support, sales and marketing, and customer service,” JLL said.

Office demand in Southeast Asia is seen increasing 6% annually until 2020 amid a 5% economic growth. JLL expects a “strong” office take-up particularly in Manila and Kuala Lumpur over the next five years.

Co-working and serviced office space currently accounts for 1% to 5% of total office stock in developed cities, according to JLL.

The sharing economy, flexible working and freelancing have driven the 10% expansion of such offices. At this rate, co-working and serviced offices could comprise 20% to 30% of office stock by 2030.

In Southeast Asia, co-working spaces represent less than 1% of the total office stock and could reach 10% to 15% by 2030, according to JLL.

“We believe changes in the next five to 10 years will raise efficiency, productivity and income levels and improve the quality of life globally,” the real estate consultancy said. 

This article was originally published in Businessworld.